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Gam, LLC v. Blue Swan, Inc.

Superior Court of Delaware

December 11, 2018

Gam, LLC
v.
Blue Swan, Inc., et al.

          Phillip A. Giordano, Esquire Gordon, Fournaris & Mammarella, P.A.

          Adam Balick, Esquire Melony Anderson, Esquire Balick and Balick, LLC

          VIVIAN L. MEDINILLA, JUDGE.

         Dear Counsel:

         This is the Court's ruling on Defendants' Motion to Vacate Entry of Partial Default Judgments. For the reasons stated below, Defendants' Motion is GRANTED.

         Procedural and Factual Background

         The allegations in the Complaint arise from a contract dispute between Gam, LLC ("Plaintiff and/or "Landlord") and Blue Swan, Inc. and L. Ronald Olivere (collectively "Defendants" and/or "Tenants"). Defendants operated a dry cleaner, laundry, and alterations business at the premises and entered into a ten-year lease (the "Lease") with Plaintiff on or about December 12, 2003.[1] Mr. Olivere signed an Individual Personal Guarantee on December 12, 2003, whereby he agreed to be personally liable for all amounts due under the Lease.[2] At an unspecified time, the parties agreed to renew the Lease for an additional five years.[3]

         The Defendants failed to meet their contractual obligations to pay rent. In the Spring of 2018, Plaintiff gave notice to Defendants that that it was terminating the Lease unless past due payments were made.[4] On April 27, 2018, Plaintiff sent Defendants a Notice Letter that they were in default and gave them ten days to cure.[5] Defendants failed to make their required payments in an amount of $281, 922.91.[6]

         On May 29, 2018, Plaintiff initially filed suit in Justice of the Peace Court ("JP Court") for summary possession and the jurisdictional limit of damages of $15, 000 for unpaid rent. On June 15, 2018, Plaintiff filed the Complaint against Defendants in this Court for breach of contract.

         It is undisputed that during the time of various filings, the parties, through counsel, engaged in regular and frequent discussions about the sale of Defendants' business in an effort to resolve the pending claim(s). It was contemplated that portions of the proceeds of the sale of the business might be used to pay past due amounts. Counsel for Defendants represented that he believed that Plaintiff was not pursuing litigation in this Court because of the continued negotiations between the parties. He did not enter an appearance or otherwise plead on behalf of Defendants nor did Plaintiff communicate to Defendants or counsel its intent to seek default judgment in this Court.

         On July 9, 2018, the JP Court entered default judgment for Plaintiff. On July 20, 2018 and July 26, 2018, Plaintiff filed, and this Court entered, Partial Default Judgment against Defendants in the amount of $295, 874.35. On July 30, 2018, the JP Court vacated sua sponte the default judgment it entered on July 9, 2018. On August 30, 2018, default judgment was again entered in JP Court, but Plaintiff only sought default judgment for summary possession because it had acquired default judgment in this Court.

         When Defense counsel became aware of the judgment(s) on September 27, 2018, he immediately filed this Motion to Vacate Entry of Partial Default Judgments. On November 11, 2018, Plaintiff filed a Response in Opposition to Defendants' Motion to Vacate Entry of Default Judgment. The Court held a hearing on December 4, 2018.

         Standard of Review

         Under Superior Court Rule 55(c), the Court may set aside a default judgment under Rule 60(b).[7] Delaware courts favor Rule 60(b) motions as they allow for the adjudication of cases on the merits and allow parties to have their day in court.[8] Under Rule 60(b), "[o]n motion and upon such terms as are just, the Court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, or excusable neglect[.]"[9] "A motion to vacate a default judgment pursuant to Superior Court ...


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